RELATED COMPANIES

x

Loading data...

For Godrej Consumer Products or GCPL, the fast moving consumer goods arm of the Godrej group, a decision taken sometime in 2008 has turned out to be a game changer.

From a Rs 1,000-crore company selling soaps and household products in India, GCPL has grown five fold in the last five years to emerge as a multinational consumer goods company with a presence in leading emerging markets.

The latest Cinthol advertisement re-launching the company's 60-year-old soap brand is symbolic of the metamorphosis that the company has undergone in the last five years.

In 2008, the company formulated the 3 x 3 strategy of growing in the three categories of hair, household and personal care in the three continents of Asia, Africa and Latin America. GCPL, has now completed buyouts in countries ranging from Indonesia in Asia to Argentina in Latin America and Senegal in Africa - six of these deals were done in 2010.

Today, the company is one of the largest marketers of toilet soaps in the country and is also a leader in hair colour and household insecticides with brands such as Good Knight, Cinthol, Godrej No.1, Expert, Hit, Jet, Fairglow, Ezee, Protekt and Snuggy.

Over the years, GCPL has acquired the Darling group, which sells hair extension products and Tura, a leading medicated brand in Africa; Megasari Group, a leading household care company in Indonesia; Issue Group and Argencos, two leading hair colorant companies in Argentina; Keyline Brands in the United Kingdom; Rapidol and Kinky Group, South Africa; and Godrej Global Mideast FZE. In most of these markets, the Indian firm owns brands which rank either at the top or are a close competitor to the market leader.

The company is now gaining from cross-pollination between geographies. "We never saw any slowdown in any of our markets," says its managing director A Mahendran. Over the last five years, the company has been growing in each of its markets at an average annual rate of 15-20%. According to Mahendran, it is incumbent on companies to build a culture of anticipatory management - to help foresee volatility in costs, prices, and demand-supply in order to be geared to combat any slowdown.

"We believe innovation along with an aesthetic value-for-money approach makes us different from our peers," says Mahendran.

For all the acquisitions outside of India, GCPL has rarely rejigged the managements of the businesses which it has acquired. Rather the local management has been empowered to display "professional entrepreneurship" - a concept where every unit manager is encouraged to run the unit as an entrepreneur in a professional manner.

In 2011, the company chalked out an ambitious target of growing by 10 times in 10 years. And not surprisingly, India will be the most important market for the company - with 60 % of its revenues projected to come from the country. The management expects 15% sustained growth for the next five years in the FMCG business based on its reading of higher rural penetration and modern retail.

"One of the major challenges being faced by the company in achieving this target is the dearth of good talent," says Mahendran.

GCPL plans to embark upon high training velocity and forge tie-ups with management schools to source talent. Another challenge is currency volatility due to the company's presence in several countries across different continents.

Cultural compatibility is also an issue for Indian companies seeking to emerge as multinational firms. The promoters - the Godrejs - are open to a global business culture. In most global buyouts, GCPL has chosen not to alter the name of the firms it has acquired, and in fact, even refrained from tagging the Godrej brand in these ventures.

The stock market appears to have recognised the recent burst of growth. At a time when investors have been buying into the stocks of almost all FMCG companies during a phase of uncertainty, the GCPL stock has outperformed its peers. No wonder then that Mahendran has the final word on this. "If the fundamentals of a company are good, the stock market cannot de-rate or punish it," he says.